The Williamsburg City Council repealed tax increases linked to the city’s Tourism Development Fund and unanimously approved a $34.19 million operating budget for fiscal year 2019 at its Thursday meeting.
This marks a $1.6 million decrease from this year’s budget, which is set to expire on June 30. Barbara Dameron, the city’s finance director, says the difference is primarily due to the elimination of the increased lodging tax in the general fund.
Two of the most controversial elements of the new budget at the meeting’s public hearing period were adoption of Senate Bill 942, which levies a 1 percent sales tax increase across the Greater Williamsburg area, and the three-cent real estate tax increase, which is meant to cover increases to administrative, educational and public safety spending.
The Historic Triangle sales tax bill will levy the same tax increase in Williamsburg, James City and York counties with the goal of promoting tourism across the region. Revenue generated by the increase will be divided between the three localities and the Greater Williamsburg Chamber and Tourism Alliance, which will establish a tourism council and use the funds to increase its regional tourism marketing efforts. The tax increase is set to take effect on July 1.
In order to join James City and York Counties in accepting the terms of SB942, the Council first had to repeal the room, meal and admissions taxes outlined in the fiscal year 2018 budget which were meant to go into the Tourism Development Fund.
Council member Douglas Pons says that, while he was originally in support of the Tourism Development Fund taxes, he sees a much greater opportunity in the boon that the sales tax bill could provide to the area’s tourism economy.
“I think the notion of taxing the visitors through the TDF’s admission tax was a smart way to go, but I think here, we have an opportunity to raise funds that can be spent in a more impactful way to generate greater results,” said Pons.
In a presentation to Council, Dameron estimated that the tax increase will generate $1.9 million in fiscal year 2019 that will go toward the city’s Tourism Fund. The $5.2 million fund will go toward projects including the implementation of new downtown vibrancy strategies and arts initiatives in the city such as CultureFix and An Occasion for the Arts.
“Granted, it’s not perfect, but it sets the stage for the city of Williamsburg, James City County and York County to have the resources to make substancial changes,” said Council member Barbara Ramsey.
Yorktown resident Pamela Pouchot disagreed with the Council’s sentiments, asking the body to go forward with the Tourism Development Fund taxes and reject the sales tax bill’s “regressive policies.”
“This bill was concieved behind closed doors and reeks of dirty politics,” said Pouchot. “Historic Triangle citizens, many making minimum wages or not much higher in tourism-related seasonal part-time jobs with no benefits, should not have to foot the advertising bills for billion-dollar corporations.”
Another big change coming in the next operating budget is a real estate tax increase of 3 cents, raising the city’s property tax rate for the first time since 2013. The adjustment will cost taxpayers 60 cents per every $100 of the assessed value of their homes, and is estimated to bring in $648,721 in the upcoming fiscal year.
The funds raised by the real estate tax increase will go toward a portion of the $9.8 million being spent on Williamsburg-James City County Schools, as well as the salaries of seven new full-time city employees. Included in the new staff are two school resource officers — one each for Berkeley Middle School and James Blair Middle School — who would supplement the single part-time officer who would cover both schools under the current budget.
Mayor Paul Freiling explained that the city’s low property tax rate is usually “subsidized” by a strong tourism economy, but recent stagnation in the tourism market is what forced the Council’s hand in raising the real estate tax.
“If the Tourism Development Fund does what it’s designed to do, it eventually relieves some of that pressure so we have tourism contributing to the general fund to a much bigger degree and we won’t need a property tax increase,” said Freiling. “If we don’t get tourism turned around and it keeps going on the trajectory that it’s on, then we’re just going to see the property tax rates continue to go up, because our obligations are not going down.”
The new budget will take effect on July 1.
Arriaza can be reached at 757-790-9313 or on Twitter @rodrigoarriaza0.